Billy Joel and Bruce Hornsby play them. So did Duke Ellington, Glenn Gould, Cole Porter, Vladimir Horowitz and Sergei Rachmaninoff. Steinway’s list of steadfast artists, living or departed, is unparalleled, and Steinway pianos are among the highest prized music-making devices in a family of instruments that represents some of the most elaborate and sophisticated acoustic technology ever devised. For 160 years, Steinway & Sons has been hand-assembling pianos, continuing to do so after its rivals had begun automating aspects of this process. And, as of Monday, they’ve agreed to be acquired by private equity firm Kohlberg & Co. for about $438 million.
It’s not the first sale for the legendary company, originally founded by Henry Engelhard Steinway in 1853: Steinway was first sold to CBS in 1972, in part to help fund a modernization overhaul. According to my recent edition of Larry Fine’s Acoustic & Digital Piano Buyer, CBS got out of the music instrument business in 1985, divesting itself of Steinway to an investment group, which turned around a decade later and sold the company to orchestral instruments manufacturer Conn-Selmer, Inc. It’s the public company that formed from that purchase, known as Steinway Musical Instruments, Inc., that Kohlberg & Co. just bought. You can find it listed on the NYSE as LVB, and — no surprise — its share price is up considerably since the news broke, striking a five-year high of over $35. Kohlberg & Co. says it plans to buy outstanding shares of common stock for $35 per share, cash, and after the purchase is complete — expected to happen in the third quarter — Steinway will return to being a privately held company,
According to Yahoo Finance, the sale has detractors: A Pennsylvania-based law firm says it’s “investigating potential claims against the board of directors of Steinway Musical Instruments Inc. … concerning possible breaches of fiduciary duty and other violations of law” related to the company’s sale to Kohlberg & Co. Apparently there’s some dispute over whether the company “undertook a fair process to obtain fair consideration for all shareholders of Steinway” before clinching the deal.
But the bigger question is whether any of this impacts Steinway’s long-cherished hand-assembled build process, a process that results in each Steinway piano, identical model or no, offering unique sonic and mechanical characteristics. (In fact some artists have taken this to extremes: In her book A Romance on Three Legs: Glenn Gould’s Obsessive Quest for the Perfect Piano, author Katie Hafner wrote about Canadian pianist Gould’s obsessive devotion to a single Steinway grand, CD 318, the only piano he was willing to play and record with for most of his career. When CD 318 was damaged beyond repair — dropped by movers — he was unable to find its equal, eventually defecting to Yamaha for his second recording of Bach’s Goldberg Variations, shortly before his death from a stroke in October 1982.)
According to Kohlberg & Co. partner Christopher Anderson, the firm intends to “accelerate [Steinway's] global expansion, while ensuring the artisanal manufacturing processes that make the company’s products unique are preserved, celebrated and treasured.” It’s that “artisanal” process pianists who value Steinway pianos care about. Private equity firms don’t spend hundreds of millions on companies to preserve tradition for tradition’s sake, and Steinway had a rough go of it during the recent recession, with piano sales plummeting. Steinway bounced back in 2011, however, and assuming you agree that consumer spending’s on an up-trend, there’s reason to be cautiously optimistic about the company’s future.